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Why 2022 is the WORST time to buy property - featured image

Why 2022 is the WORST time to buy property

It’s a bold statement, but it’s true.

For some of you who are reading this right now, 2022 will absolutely be the worst possible time you could consider buying a property.

Business Risk Problem

There is the spectre of interest rates rising a few more times, inflation surging higher, the continual media coverage predicting falling property values and an imminent property crash (which by the way is wrong) and geo-political tensions around the world.

In fact for some people, moving forward with a real estate purchase this year would have the potential to cripple them financially, not just now but well into the future.

Sounds dramatic, right?

And I'll give you 9 reasons why this could be the worst time to buy property in a moment… but here’s the truth.

This statement rings true in 2022.

It was also true last year.

And the year before that.

And in 2015, 2010, 1985, 1972…

The reality of real estate is that…

There is no “best” time or “worst” time to buy property

Here’s why…

Property investment is a process, not just an event.

So rather than just talking about going out and buying a property in 2022, the right time for you to consider investing is when you have all your ducks in a row.

This means you have:

  • a strategic property plan, so you know where you're heading and what you need to do to achieve your financial goals,
  • set up the right ownership structures to protect your assets and legally minimise your tax,
  • a robust finance strategy with a rainy day buffer in place to buy you time

Of course, for some 2022 will be a great year to invest, but in a moment I'll explain why that will not be the case for others.

Sure interest rates are rising, but there is more to property price growth than that.

It’s likely that you’ve heard me talk about the drivers of property price growth over the years.

There are so many things that determine a property’s price performance and growth trajectory, many of which are well outside of your control, and some of which also have nothing to do with the property itself.

These include, but are not limited to:

  1. The economy – the performance and state of the broader economy impact people’s ability to buy and sell property as well as …
  2. Consumer Confidence – when people feel comfortable about their financial situation and their future job prospects they are more likely to make big purchases like moving home or buying an investment property.
  3. Employment levels – if the community at large is experiencing high levels of unemployment, then fewer people can afford to pay a mortgage, which reduces demand for property
  4. Government policy – aspects to do with tax, depreciation, and homeownership grants will work to boost or reduce demand for property, particularly new property in recent years, which is where the federal government’s primary agenda has been.
  5. Population growth – or household formation to be more exact, as when more people move into an area this equals more demand for housing, whether it’s to buy or rent.
  6. Local Demographics – things like average incomes, average age, household structure, crime rates, and employment opportunities.
  7. Supply – The basic economic principle of supply and demand is a fundamental property market driver of price growth.
  8. Availability of credit – property investment is a game of finance with some houses thrown in the middle, but even owner-occupier demand is very much driven by the availability of finance and the cost of money, in other words, interest rates.

Now, as a result of these factors – which are by no means an exhaustive list, but they give you a general indication of some of the major influences on property prices – our property markets move through cycles, from booms to busts and back again.

Last year rising property values around Australia were driven by a combination of pent-up demand and historically low-interest rates leading to FOMO (fear of missing out), which led many home buyers and investors to make take shortcuts just to get in the market.

Now we've moved to the next stage of the property cycle - the adjustment phase where property prices are correcting in some locations.

Currently, I see a window of opportunity for property investors with a long-term focus.

This window of opportunity is not because properties are cheap, however, when you look back in three years' time the price you would pay for the property today will definitely look cheap.

The opportunity arises because consumer confidence is low and many prospective homebuyers and investors are sitting on the sidelines.

However, I believe later this year many prospective buyers will realise that interest rates are near their peak, inflation will have peaked and the RBA's efforts will bring it under control.

And at that time there will be picked up demand that will be released as green overtakes fear, as it always does as the property cycle moves on.

Strategic investors will take advantage of the opportunities our property markets will offer over the next couple of years maximising their upsides while protecting their downsides.

This year buyers are still keen but are being more cautious and there is now a "flight to quality" with A-grade homes and investment-grade properties still selling well, but secondary properties languishing on the market.propertycycle

Over the last year, the apartment market hasn't grown as strongly as the housing market, but now with the differential in price between units and houses at the highest level on record, and houses becoming more unaffordable for many, I can see continuing growth in family-friendly apartments in great neighbourhoods.

Even apartments in the CBD towers and accommodation around universities are renting well as immigrants and students return, however, these never really made good investments and I would steer clear of them.

And rents should also keep increasing around Australia as there is a desperate shortage of good rental accommodation.

So why could this be the worst time to invest for some people?

Please let me explain with an example...

Between 2016 and 2018, Sydney and Melbourne property values soared allowing those who owned properties in our two big capital cities to amass small fortunes along the way.

But it’s important to know that just because “Sydney boomed”, that doesn't mean that ALL of Sydney's housing boomed.

It means that overall, the majority of properties across the city experienced an increase in value.

However, there are always some areas, pockets, streets, and individual houses that perform better or worse than the average.

For example, the value of the apartments in many of the high-rise, Legoland towers around Sydney languished as concerns about structural integrity, following the Opal Towers debacle tarred all new apartments with the same brush.

Of course, the concerns raised by Covid19 only added to this.

Let me give you a different example.

Let’s say a couple owned a property in a sought-after Sydney suburb in 2017.

They had purchased it 12 months earlier for $1.55m.

It’s right in the middle of a booming property market and sadly, the couple split up.

It’s a messy and contentious divorce, and both parties want to sell the home as quickly as possible so they can move on.

They also don’t want any looky-loo neighbours snooping through their home every weekend, and they don’t have the energy or appetite for a big, public marketing campaign.

Home Property

So, they engage real estate to sell the home privately/off-market.

It reaches fewer potential buyers and drives less competition, but they secure a buyer within a week.

They sell the property for $1.6m in a hasty settlement and move on.

Had they taken the property to the open market – say, an auction – and a number of would-be buyers fell in love with the property, they could have sold it for more money.

But their circumstances dictated a swift sale, so they accepted the price they got and moved on.

It could be the case that one street over, a couple owns a very similar property.

They are planning to move in with their parents for six months while they build their next property, so they have no deadline or timeline pressures and they’re happy to wait for the right buyer to come along.


They list their home for auction, pay for an expensive but very high-profile marketing campaign, and achieve a final sale price of $1.825m.

Two similar homes, two very different outcomes.

Neither is “right” or “wrong”, and this is the infuriating truth of real estate: there are no “definites.”

Just a series of educated guesses and informed choices, which – with the right expert guidance – can lead you towards making profitable decisions for your future.

When it comes to deciding the right time to buy or sell, at the end of the day, it’s our own personal situation as much as external factors that influence the best course of action we should take.

The fact is, any time could be the worst time for you personally to buy a property... or it could be the best time to buy.

It truly depends on your own goals, budget, timeline, risk profile, and circumstances as to whether 2021 is a good time to buy.

If you've just lost your job or your income is insecure in the current economic climate, then yes, this could be a risky time to commit to a mortgage; in fact, you’d struggle to get a loan.

However, if you're financially stable and have a deposit ready to go, then some might argue that with 2% mortgage rates and prospects of strong house price growth, 2021 could be the property buying opportunity of a lifetime.

What's ahead for our property markets for 2022?

That's a common question people are asking now that our we've entered the adjustment phase of the property cycle.

This chart shows the forecasts made by Dr, Andrew Wilson, chief economist of My Housing Market.


Property Forecasts2022

But remember, there is not one Sydney or Melbourne or Brisbane property market.

There are houses, apartments, townhouses and villa units.

There are CBD properties, inner ring, middle ring and outer suburban properties.

In other words, there are markets within markets.

Buyers of being more cautious, but there is still strong demand for A-grade homes and investment-grade properties.

  • Affordability issues will constrain many buyers.
    The impetus of low-interest rates allowing borrowers to pay more has worked its way through the system and with property values being 20- 30% higher than at the beginning of this cycle at a time when wages growth has been moderate at best and minimal in real terms for most Australians, means that the average home buyer won’t have more money in their pocket to pay more for their home.
  • The pent-up demand is waning – While there are always people wanting to move house and many delayed their plans over the last few years because of Covid, there are only so many buyers and sellers out there and there will be fewer looking to buy in 2022.
  • Apartments are likely to outperform as affordability makes potential home buyers look for alternatives.

In other words, not all locations will continue growing strongly moving forward and not all properties will grow in value.

Sure the value of some properties will continue falling over the next 6 months, but I can see properties located in the inner and middle-ring suburbs, particularly in gentrifying locations, significantly outperforming cheaper properties in the outer suburbs.

While the outer suburban and more affordable end of the markets have performed strongly so far, affordability is now becoming an issue as the locals have had minimum little wage growth during the time when property prices have boomed.

In these locations, the residents don’t have more money in their pay packet to pay the higher prices the properties are now achieving.

More than that, Covid19 has adversely affected low-income earners to a greater extent than middle and high-income earners who are likely to recover their income back to pre-pandemic levels more quickly, while many have not been hit at all.

Moving forward there will be a flight to quality properties and an increased emphasis on liveability.

As their priorities change, some buyers will be willing to pay a little more for properties with “pandemic appeal” and a little more space and security, but it won’t be just the property itself that will need to meet these newly evolved needs – a “liveable” location will play a big part too.

Those who can afford it will pay a premium for the ability to work, live and play within a 20-minute drive, bike ride or walk from home.

They will look for things such as shopping, business services, education, community facilities, recreational and sporting resources, and some jobs all within 20 minutes' reach.

Why 2022 could be the worst time for you to buy an investment property

So back to my initial thoughts that for some people this will be the worst time to buy property.

I've written about this topic in detail here, but in short, you should not buy an investment property if:

    • You are buying a property to pay less tax
      Don't be lured into buying secondary properties that offer high depreciation allowances for excessive negative gearing.
      These new properties tend to come at a premium price, and rarely deliver capital growth for many years.
      In my mind negative gearing is not an investment strategy - it's for short-term funding strategy which only makes sense when used to purchase high-growth investment great properties.
      These tend to be established houses, townhouses, or apartments in desirable streets in top locations in the middle ring suburbs of our three big capital cities.
    • You are driven by FOMO – fear of missing out
      Sure our property markets are moving surged last year, and of course, it's human to become emotional when considering buying a home or an investment property.
      But investing emotionally leads to bad investment decisions – it's exactly this type of emotion that makes investors fall prey to property marketers and spruikers who will offer you a way to get rich quickly.
      2022 will be a year of a flight to quality as there are more properties on the market - so don't take shortcuts.
    • You want to get rich quickly
      Property investing is a long-term endeavour, it is a process, not an event.
      The property you eventually purchase will be the result of many decisions that you need to make prior to even starting to search for a property.
      I’ve found it takes the average property investor 30 years to become financially free.
  1. House Model On Top Of Stack Of Money As Growth Of Mortgage Credit, Concept Of Property Management. Invesment And Risk Management.
    • You don’t really understand how property investment works
      Many people mistakenly believe they understand property investment because they own a house or have lived in one.
      So they end up buying a property close to where they want to live, where they want to retire or where they holiday.
      Again, these are emotional reasons to purchase a property rather than selecting based on sound investment fundamentals.
      On the other hand, successful investors have formulated a sound investment strategy that suits their risk profile and helps them achieve their long-term goals and one which has stood the test of time.
    • You're not financially fluent
      I found many investors are looking to invest in property to help increase their cash flow, but if they do not have the financial discipline and cash flow management skills required, taking on the extra debt of an investment property only compounds their problems.
    • You're looking for a multi-purpose property
      If you are buying a property with the aim of creating wealth, but it also has to be your future home or a part-time holiday home, or somewhere to retire in the future; then you're probably wanting too much for that one little property to achieve.
    • Your finances are not in order
      Property investment is a game of finance with some real estate thrown in the middle.
      To get into the property you should have a stable job, profession, or business with a steady income and need to be attractive to the banks so they lend you money, plus you should have sufficient stashed away in a financial buffer to see you through the inevitable rainy days ahead.
  2. money savings
    • You don't have enough money (yet!)
      If you can’t afford an investment-grade property, either because you haven’t saved a sufficient deposit or you can’t service the loan repayments, then rather than buying a secondary property, in my mind it’s better that you wait and buy an investment-grade property.
    • You are trying to time the market or find the next hotspot
      Sure property markets move in cycles and it would be great to buy near the bottom or find a location that will be the next hotspot, but the landscape is littered with investors who tried to time the market and failed.
      Instead, the right time to buy real estate is when your finances are in order and you’ve got the ability to purchase an investment-grade property.
      Remember there is no one property market in Australia so there will always be opportunities somewhere.

ALSO READ: 52 years of valid reasons not to invest

About Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit

Hi Michael, Thanks for the great article. It's a little old now but interesting to see how things have panned out and you have been very accurate with your thoughts and insight. You continue to add value to me after 17 years of investing with yo ...Read full version

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Reza - thanks for the kind words

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Interesting article indeed. First I thought it's really the worst year to take the action, as everyone does by just reading the headlines. Then I faced with a comprehensive property-people analysis which is worth to read few times. Thanks Michael

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